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We're all human, and sometimes we fall behind on bills, either because we run out of money or we simply forget to pay them. This may be the case for you if you have a mortgage. Neglecting your home loan is not ideal, but missing a single payment doesn't have to hurt you too badly.
The consequences of missing one mortgage payment
Skipping any bill, your mortgage included, could damage your credit score. When you miss a payment, it will be reported to the credit bureaus that determine your score. A lower score could make it more difficult for you to borrow money in the future.
In addition, you'll face a late fee for not being timely with your payment. The fee will be set by your mortgage lender and spelled out in your loan agreement. That said, mortgages generally come with a grace period that allows you to pay late and avoid a penalty. Often, that grace period is 15 days, but yours may be shorter or longer. Again, you'll need to check your loan documents to see what you're dealing with.
Will a single missed mortgage payment result in foreclosure?
Missing one mortgage payment won't lead to foreclosure; you'll need to miss two payments for that to even be an option. Furthermore, in most cases, lenders won't initiate the foreclosure process until you're more than 90 days delinquent on your payments. But even then, you won't immediately land in foreclosure. Instead, you'll be warned you've defaulted on your mortgage and have 30 days to get current or otherwise face foreclosure.
Now, let's say you simply forget to make one mortgage payment and you don't realize it until you get a late notice. In that case, if you have the money, you'd simply pay your bill and get current. Even if you're beyond your grace period, your lender might waive your late fee if it's your first offense.
If you skip a mortgage payment -- and then another -- because you don't have the money, that's a different story. It doesn't necessarily mean foreclosure will be in your future, either. Generally, lenders are willing to work with borrowers to avoid foreclosure because it's a costly and undesirable process for them as well. Lenders don't make money by forcing the sale of homes, evicting borrowers, and dealing with the administrative headache of foreclosure. Rather, they make money by collecting mortgage interest, so it's in lenders' best interest to work with homeowners. If your account has been in good standing and your finances take a temporary hit, your lender may be willing to give you some leeway.
One thing you should also know is that under the CARES Act, which doesn't expire until the end of 2020, you could be able to put your loan into forbearance. Many homeowners who request mortgage forbearance -- the option to hit pause on home loan payments -- are entitled to it for up to 360 days. If you're generally in decent financial shape and need one month's reprieve, you may not need to put your mortgage into forbearance. Your lender might be willing to work something out. But again, you'll need to be proactive and reach out.
How to avoid skipping mortgage payments
If you're worried about missing a mortgage payment due to sheer forgetfulness, set up autopay on your account. In most cases, your monthly payments can be taken out of your bank account automatically so you don't have to think about it. Following a budget will also help ensure that you don't miss a mortgage payment due to a money-related crunch.
Skipping a mortgage payment isn't great, but it happens. Reach out to your lender immediately to discuss your next steps. If you have the money to make good on that missed payment, the consequences should be minimal. And even if you don't have the cash, you may have painless options for catching up.
